3. The new knuckles keep the upper control arms in the stock location, but allow for the subframe drop brackets. The steering connection point is also raised to account for the extra lift, but you'll still have to align the vehicle once the lift installation is done.
To get the old knuckles off, you'll need to remove the nuts on the upper and lower ball joints, and use a large hammer to whack (hard) the knuckle around the upper ball joint and lower ball joint.